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House panel seeks alternatives to Volcker rule
House Financial Services Committee ranking member Spencer Bachus (R-AL) speaks during the Reuters Washington Summit September 23, 2010.
Credit: Reuters/Gary Cameron
WASHINGTON |
WASHINGTON (Reuters) - A top Republican lawmaker on Tuesday asked the financial industry to suggest alternatives to the hotly debated Volcker rule in advance of a planned fall hearing.
Representative Spencer Bachus urged investors and market players to submit ideas to the House of Representatives Financial Services Committee before September 7, saying that the rule as currently proposed would have a "devastating" impact on the U.S. economy.
"We must consider legislative alternatives that will not stifle economic growth and job creation," Bachus, who is the committee chairman, said in a statement.
The Volcker rule was mandated by the 2010 Dodd-Frank Financial Reform law to prevent banks that receive government backstops like deposit insurance from making risky trades that could endanger taxpayer and depositor funds.
The rule, which was named for former Federal Reserve Chairman Paul Volcker, also restricts banking investments in hedge funds and private equity funds.
A proposed Volcker rule was released in October and a final rule is expected in the next few months.
New legislation to replace the Dodd-Frank provision that mandates the Volcker rule is unlikely to pass a divided Congress in the lead-up to presidential elections.
(Reporting By Alexandra Alper; Editing by Leslie Adler)
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Does anyone else see a problem with this? Our economy, and the world’s, just collapsed because of the abuses of our financial industry and now this Republican goes to those same people asking them for suggestions on how to regulate them. Talk about the fox guarding the hen house. We’re screwed.
I’ll take this as a prime opportunity for me to reiterate that all regulation is not good regulation; that is, quantity is not quality. And that “quantity regulation” that is not of good quality only serves to hamper economic activity. It would behoove liberals to make sure the regulation they so highly value is effective and poignant as it would greatly increase the chance that Republicans would aide them in their efforts.
DoddFrank, and specifically the Volcker rule is a good example of ineffective regulation. I have even heard regulators and a Fed governor say as much. The Volcker rule, nor any other provision in DoddFrank, addresses the issue that was created when portions of GlassSteagall were repealed by GrammLeechBliley.
Two of the main issues that allowed for the GFC or great recession to transpire were the push for home affordability (largely to avert a likely recession in the early 2000’s), and the repeal of GlassSteagall which allows for banks to take bigger risks in their portfolios.
We need to separate traditional depository institutions from investment banking/trading. The Volcker rule does not successfully accomplish that, as evidenced by JPMorgan’s near $6T loss. Yet, you have comments from individuals like fromthecenter whose ignorance only serves as a hindrance to achieving effective regulation.
Sometimes I don’t know whether to blame our representatives or the American people for some of our issues, I’m starting to think the latter is more responsible.
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